LI (Migration)

[2017] AATA 765

LI (Migration) [2017] AATA 765 (27 April 2017)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Zhengfan Li
Mr Chen Zhang
Mr Yumeng Zhang
Mr Zhengdeyan Chen
Mr Hongming Zhang

CASE NUMBER:  1511360

DIBP REFERENCE(S):  CLF2014/119998, CLF2015/23197

MEMBER:Katie Malyon

DATE:27 April 2017

PLACE OF DECISION:  Sydney

DECISION:The Tribunal affirms the decision not to grant the visa applicant a Business Skills (Residence) (Class DF) visa.

The Tribunal does not have jurisdiction to review the decision in relation to the second named applicant.

Statement made on 27 April 2017 at 3:23 pm

CATCHWORDS

Migration – Business Skills (Residence) (Class DF) visa – Subclass 890 (Business Owner) –– Turnover amount requirement not met – Company ceased operating – No ownership interest held

LEGISLATION
Migration Act 1958, ss 65, 134(10) 375A
Migration Regulations 1994, Schedule 2, cl 890.211, cl 890.213, cl 890.221, r 1.03, r 1.11

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 4 August 2015 to refuse to grant the visa applicant a Business Skills (Residence) (Class DF) Subclass 890 visa (Subclass 890 visa) under s.65 of the Migration Act 1958 (the Act).

2. The applicants applied for the visa on 8 September 2014.  The first names applicant, Ms Zhengfan Li, indicated that the main business, in which she has a 100% interest, is Protective Fire System Pty Ltd (the Company).  Based on documentation provided, the Company has been involved in the manufacture and sale of cable linear heat detectors.  

3. The delegate refused to grant the visa on the basis that Ms Li had not demonstrated the Company’s turnover in the 12 months immediately before to the visa application was at least AUD $300,000 as required by cl.890.213 of Schedule 2 of the Migration Regulations 1994 (the Regulations).  A copy of the delegate’s decision was provided to the Tribunal.

4. Ms Li appeared before the Tribunal on 20 December 2016 by teleconference from China and again on 6 February 2017 in person to give evidence and present arguments.  The Tribunal hearings were conducted with the assistance of an interpreter in the Mandarin and English languages.  The applicants were represented in relation to the review by their registered migration agent, who also attended the Tribunal’s hearings.

5. For the reasons outlined below, the Tribunal has concluded that the decision under review should be affirmed in respect of the first, third, fourth and fifth named applicants.  Further, the Tribunal has concluded that it does not have jurisdiction in relation to the second named applicant.

   ISSUE

6. The issue in the present case is whether at the time of decision (that is the Tribunal’s decision) Ms Li meets the requirements in cl. 890.221 of Schedule 2 to the Regulations. Essentially, this requires that the applicant continue to meet cl.890.211 by having an ‘ownership interest’ in 1 or more actively operating ‘main businesses’ in Australia.

   RELEVANT LAW

7. At the time the visa application was lodged, the Business Skills (Residence) Class DF visa contained 4 subclasses: Subclass 890 (Business Owner); Subclass 891 (Investor); Subclass 892 (State/Territory Sponsored Business Owner); and, Subclass 893 (State/Territory Sponsored Investor).  The visa applicants have made claims in relation to Subclass 890 only.

8. The criteria for a Subclass 890 visa are set out in Part 890 of Schedule 2 to the Regulations. At least one member of the family unit must satisfy the primary criteria. The primary criteria require the following at time of application:

   ·The applicant has had, and continues to have, an ‘ownership interest’ in one or more actively operating main businesses in Australia for at least 2 years immediately before the application is made: cl.890.211(1).

   ·The net value of the assets of the applicant, of his or her spouse or of the applicant and the spouse together in the ‘main business’ or main businesses in Australia is, and has been throughout the 12 months immediately before the application is made, at least $100,000: cl.890.212.

   ·In the 12 months immediately before the application is made, the main business or main businesses had a turnover of at least $300,000: cl.890.213.

   ·Throughout the 12 months immediately before the application is made the main business or main businesses, first, provided an employee or employees with a total number of hours of employment at least equivalent to the total number of hours that would have been worked by 2 full-time employees over that period of 12 months and, second, provided those hours of employment to an employee or employees who were not the applicant or a member of the applicant’s family unit and were Australian citizens, Australian permanent residents or New Zealand passport holders: cl.890.214.

   ·The net value of the business and personal assets in Australia of the applicant, of his or her spouse or of the applicant and the spouse together is and has been throughout the 12 months immediately before the application is made at least $250,000: cl.890.215.

   ·Neither the applicant nor his or her spouse has a history of involvement in business activities that are of a nature that is not generally acceptable in Australia: cl.890.216.

   ·The applicant has been in Australia as the holder of one of the visas mentioned in paragraph 1104B(3)(d) of Schedule 1 for a total of at least one year in the 2 years immediately before the application is made: cl.890.217.

9. At the time of the decision, the applicant must continue to satisfy the primary criteria in cl.890.211, 890.215 and 890.216: cl.890.221 890 of Schedule 2 to the Regulations.

10. Regulation 1.03 provides that the term ownership interest has the meaning given to it in s.134(10) of the Act. That subsection provides that an ownership interest, in relation to a business, means an interest in the business as:

    (a)   a shareholder in a company that carries on the business; or

    (b)   a partner in a partnership that carries on the business; or

    (c)   the sole proprietor of the business;

    including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

11. The term main business is defined in r.1.11 of the Regulations as follows:

    (1)For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an applicant for a visa if:

    (a) the applicant has, or has had, an ownership interest in the business; and

    (b) the applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and

    (c) the value of the applicant's ownership interest, or the total value of the ownership interests of the applicant and the applicant's spouse, in the business is or was at least 10% of the total value of the business; and

    (d) the business is a qualifying business.

    (2) If an applicant has, or has had, an ownership interest in more than 1 qualifying business that would, except for this subregulation, be a main business in relation to the applicant, the applicant must not nominate more than 2 of those qualifying businesses as main businesses.

12. The term qualifying business is defined in r.1.03 of the Regulations as an enterprise that:

    (a)   is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and

    (b)   is not operated primarily or substantially for the purpose of speculative or passive investment.

    CONSIDERATION OF CLAIMS AND EVIDENCE

13. As noted in the delegate’s decision, a copy of which was provided to the Tribunal, based on evidence provided the delegate was not satisfied that in the 12 months immediately before the application was made on 8 September 2014 (that is, in FY2013/14) that Ms Li’s main business in Australia, or main businesses in Australia together, had an annual turnover of at least $300,000 as required by cl.890.213 of Schedule 2 to the Regulations.

14. Documentation lodged by Ms Li with the Department includes a financial report prepared on an accruals basis for the period to 30 June 2014 which claims sales of $321,622.25 of which $241,100 of the sales are from trade debtors.  In the same period, Business Activity Statements (BAS) lodged with the Department confirm sales of $201,622.  The delegate requested evidence of trade debtors and other receivables.  In her response to the delegate’s request, Ms Li stated that details of debtors have been provided.  However, as the Department’s file confirms, no details of aged debtors had been provided and so the delegate refused the application on the basis that Ms Li had not demonstrated annual turnover of at least $300,000 in the 12 months before lodgement of her Subclass 890 visa application.

    Hearing on 20 December 2016

15. Prior to the hearing, and at the request of the Tribunal, Ms Li’s representative provided a copy of that Company’s tax return for the period 1 July 2013 to 30 June 2014 as lodged with the Australian Taxation Office (ATO).  The Tribunal notes that the Company’s tax return as lodged with the ATO for the year ended 30 June 2014 reports income from the sale of goods of $321,621. 

16. In addition, Ms Li’s representative provided a letter dated 9 December 2016 signed by Andrew Ngo, CPA with Goh Accountants and Tax Agents.  The letter from Mr Ngo confirms that Goh Accountants have been assisting the Company in preparing its income tax, BAS, ASIC company returns, PAYG and superannuation since 1 July 2011.  Mr Ngo notes that, for the period 1 July 2013 to 30 June 2014, the Company’s BAS were prepared on a cash basis whilst its financial statement for the same period (lodged with the Department) was prepared on an accruals basis.  He states this is consistent with the manufacturing nature of the Company’s business and complies with relevant accounting and taxation requirements.  Mr Ngo also states that the Company’s tax return for the year ended 30 June 2014 confirms sales income of $321,622 as recorded in the financial statement for the same period (which had been lodged with the Department) and that it is accepted by the ATO that total sales in the financial statement prepared on accruals basis is used to assess the Company’s annual tax return.  He opines that, as such, there is no reason why the business turnover the of the Company should be anything other than the total sales recorded in the Company’s financial statement which was assessed for the Company’s annual tax return as lodged with the ATO.

    s.375A Certificate

17. At the commencement of the hearing, the Tribunal noted that the Department had issued a Certificate in accordance with s.375A of the Act (the s.375A Certificate) in relation a document in the Department’s file. It noted the effect of such a certification is that the Tribunal is prohibited from disclosing the document, or information in it. The Tribunal has considered the validity of the s.375A Certificate in this case and finds that it is valid. The s.375A Certificate has been completed by a delegate of the Minister and specifies a public interest reason why the document, or information in it, should not be disclosed. Having regard to the subject matter of this review (Ms Li’s operation of her business in Australia and whether, as the primary applicant, she thereby meets criteria for the visa) the Tribunal is satisfied there is a public interest reason in keeping the document, the subject of the s.375A Certificate, from any person other than the Tribunal.

18. The Tribunal informed Ms Li that, having read the document the subject of the s.375A Certificate, it is satisfied that the information contained in that document is totally irrelevant to the issue of her operating her business in Australia and whether, as the primary applicant, she thereby meets criteria for the visa and, further, the Tribunal has had no regard to the document the subject of the s.375A Certificate in its consideration of the issue under review. It gives the s.375A Certificate no weight in its determination of whether Ms Li has been operating her business in Australia and whether, as the primary applicant, she thereby meets criteria for the visa. Ms Li and her representative indicated their understanding of the Tribunal’s position in this regard.

    The Company and its operations

19. During the course hearing, the Tribunal discussed with Ms Li her business in Australia and the reason why her application was refused.  She told the Tribunal that she manages the Company which employs 2 full-time staff and, when there is a high demand (for products), casuals are employed. 

20. The Tribunal noted one of the requirements for the visa is that she is responsible for day-to-day management of the business.  Acknowledging that she is in China and appearing by way of teleconference, the Tribunal asked Ms Li to describe a typical working day and how she manages the business in Australia when she is in China.  She said Mr Fang calls her 2 - 3 times every week and asks for her instructions.  She tells him what to do.  They send chat messages and emails to each other as well.  Ms Li explained Mr Fang is responsible for issuing invoices and reporting on financials to her.  She signs all Company documentation. 

21. Asked when she was last in Australia, Ms Li said she left in December 2015 (that is, more than 12 months ago).  She said she has tried to come back to Australia since then to sign some documents but has been refused a visa to enter Australia.  The Tribunal notes that after the hearing her representative provided a letter from the Australian Embassy in China dated 8 September 2016 as evidence of refusal of a Visitor Subclass 600 visa application.  The letter states that Ms Li’s expressed reasons to visit Australia to sign documents for her “company registered in Australia, test its products, meet its customers, attend the annual general meeting related to the business, and arrange urgent and major repairs for the warehouse” constitute work and there is no provision to work on a Visitor visa.  Ms Li added that if she is not in Australia her employees need to sign Company documentation on her behalf. 

22. When asked some specific questions about the Company’s business, Ms Li was unable to: identify the suburb in Sydney where her factory and warehouse are located: name any of her Australian customers; confirm whether or not the Company has a website and, if so the name of the website; and, confirm whether or not the Company has any trade marks for its products.  Ms Li told the Tribunal that Mr Fang is in charge of the Company’s customer list as well as promotions and she cannot really say the English names of any customers (because she speaks Mandarin).  Cumulatively, Ms Li’s responses to the Tribunal’s questions raised some doubts in the mind of the Tribunal regarding her of managing the business on a day-to-day basis.  Asked whether the business is still operating in Australia, Ms Li said it is still running as normal and selling its products in Australia to meet Australian standards, even though there has been a change in standards in China since 1 June 2015 that has impacted sales in China.  Prior to that date, all her products were shipped to China.  The Tribunal notes BAS lodged with the Department and the Tribunal indicate products were sent overseas and, hence, no Good and Services Tax was payable by the Company.  Ms Li said the Company has about 10 customers in Australia and always attends the Fire Protection Products Expo.  Asked about competitors, she said there are none in Australia because the only countries capable of producing like products for use in subways, mines, electricity power stations and tunnels are based in the UK, USA or China. 

23. In response to the Tribunal’s observation towards the end of the hearing that it had concerns regarding her involvement in the day-to-day management of the business of the Company Ms Li said she communicates by way of telephone calls and text messages with staff.  She added that she does not have to tell her customers where the factory is located in Sydney.  And, when she goes there, her employees click on the English language website for her.  She explained this is why she employs staff who speak Mandarin as well as English.

24. The Tribunal requested Ms Li provide the following documentation to the Tribunal after the hearing: information regarding debtors as at 30 June 2014; BAS from 1 July 2014 to 31 December 2016; tax returns lodged with the ATO for FY2014/15 and FY2015/16; PAYG Summaries for all staff for FY2014/15 and FY2015/16; and, product brochures.

25. After the hearing, Ms Li’s representative provided the Tribunal with the following documentation:

    ·Table of debtors with invoice number, names of 2 buyers/debtors (Shenyang Putaian Technology Co Ltd and Shenyang Senbo Electronic Co Ltd), name/type/code of product, date of shipment to China and sales amount in AUD;

    ·General Ledger for Putaian for the period 1 July 2013 to 30 June 2014;

    ·Statement of Accounts to Putaian acknowledged by Putaian with its company seal;

    ·copy invoices to Putaian, packing list, freight invoice and Bill of Lading from Ace Global Logistics;

    ·General Ledger for Senbo for the period 1 July 2013 to 30 June 2016;

    ·Statement of Accounts to Senbo acknowledged by Senbo with its company seal;

    ·copy invoices to Senbo, packing list, freight invoice and Bill of Lading from Ace Global Logistics;

    ·updated General Ledger for aged debtors for the period 1 July 2013 to 30 June 2016 comprising the 2 debtors, Putaian and Senbo;

    ·BAS from 1 July 2014 to 31 December 2016;

    ·Company tax return for the year ended 30 June 2016;

    ·handwritten PAYG Payment Summaries for FY2014/15 and FY2015/16; and,

    ·letter dated 30 January 2017 from Andrew Ngo, CPA with Goh Accountants and Tax Agents confirming that the ATO accepts handwritten PAYG Payment Summaries.

    Hearing on 6 February 2017

26. At the commencement of the hearing, Ms Li’s representative provided the Tribunal with the following documentation:

    ·Certificate of Membership issued to the Company by Fire Protection Association Australia dated 28 April 2009;

    ·Certificate of Registration issued to the Company by Australia Made, Australian Grown (AMAG) authorising use of the AMAG Logo on products registered with AMAG for the period June 2012 to May 2013;

    ·invoice dated 29 June 2015 for the AMAG licence fee for the period to 31 May 2016;

    ·CSIRO Certificate of Conformity for The Proactive, PFS 1000 series Type E heat detectors expiring 30 April 2016; and,

    ·Product Testing Report for PFS1000 Series Linear Heat Detector authorised by the China 5 Protection Electronic Products Quality Supervision and Testing Centre.

27. The Tribunal explained at the outset that Ms Li is required to meet time of decision criteria consistent with the provisions in cl.890.221 of Schedule 2 of to the Regulations and that, based on its review of the BAS provided to the Tribunal after the last hearing it appeared the Company was not actively operating. It noted that, in the period 1 July 2016 to 30 September 2016, the BAS lodged with the Tribunal reports sales of $5,280 with $0 expenditure on salary/wages and, in the period 1 October 2016 to 31 December 2016, the BAS reports sales of $0 with $0 expenditure on salary/wages. Initially, Ms Li said that is not the case because since 1 June 2015 the Company has not been able to sell products in China until such time as the products are approved by the Chinese Recognition Committee. She added Mr Fang has recently received some phone enquiries from Australian businesses regarding the Company’s products and that they are in the process of following up these enquiries. Ms Li explained the absence of salary/wages in the 2 most recent BAS reports on the basis that, since April 2016, there have been some changes and she can cope with running the Company herself. She added that she has had conversations with Mr Fang on WeChat (China’s largest social media platform) because it is more powerful than using emails.

1. The Tribunal noted that one of the documents provided by Ms Li’s representative after the previous hearing was the Company tax return 2016, for the year ended 30 June 2016.  However, it was stamped “this printout is not to be lodged with the ATO”.  The tax return reported income from sale of goods of $332,570 yet the BAS reported income for the same 12 month period to 30 June 2016 of $95,409.  Asked for an explanation, Ms Li looked puzzled and her representative said that he would need to ask the CPA at Goh Accountants for advice.  Noting she had earlier told the Tribunal she was responsible for the day-to-day management of the Company’s business the Tribunal asked Ms Li if she could explain the difference.  Ms Li said that some of her contracts have payment terms of 6 months and some for up to 3 - 5 years.  She compared her business with a coffee shop which gets paid on the same day.  When the Tribunal expressed some surprise at payment terms of up to 5 years Ms Li observed that some of her customers are large-scale - for example, electricity power stations in China - and it takes time for things to be finished before her products can be installed.  She explained that’s what she has to show patience in managing her business. 

2. Consistent with the provisions of.359AA of the Act the Tribunal put to Ms Li that, in the week before the hearing, it had conducted a site visit to the Company’s premises in Condell Park, Sydney and observed that the premises were closed. A person working with a neighbouring business told the Tribunal that the Company has not been operating for months and offered to contact Mr Fang by telephone. The Tribunal then spoke with Mr Fang who said that he now has a new job and that the Company closed its operations effective 1 July 2016. Ms Li then told the Tribunal that her business has not had any employees since April 2016 which explains why the last 2 BAS reports indicate $0 expenditure for salary/wages. She added that, as her staff had really nothing to do there, it was reasonable for her a businesswoman not to have to pay them to do nothing.

3. The Tribunal reminded Ms Li one of the requirements for a Subclass 890 visa is that she is involved in the day to day management of at least one actively operating main businesses in Australia.  Ms Li explained that she has not been in Australia because of personal issues and a health condition for which she needed to return to China for treatment.  During that time, she said her former Australian visa (a Business Owner Subclass 163 visa) expired and she was subsequently refused a visa to enter Australia.  The Tribunal acknowledged it had received a letter confirming refusal of a Visitor Subclass 600 visa in early September 2016. 

4. In addition, the Tribunal noted that it appeared she had provided false or misleading information to the Tribunal at the previous hearing in late December 2016 regarding claimed ongoing operations of the Company and having telephone conversations with Mr Fang 2 to 3 times a week yet, at the hearing today, she had said that the business stopped operating in April 2016.  Ms Li replied that the business has not been wound up: rather, it is just closed temporarily.  She added she has big plans for the business and wants to export her Australian made products, promoting them not just in China but around the world.  She said she wants to make Australia her base because she loves the freedom here and the opportunity afforded for personal development.

   Consideration of the evidence and findings

5. As noted above, although the delegate decided Ms Li had not demonstrated the Company’s turnover in the 12 months immediately before to the visa application was at least $300,000 as required by cl.890.213 of Schedule 2 to the Regulations, the issue before the Tribunal is whether she meets the requirements in cl.890.221 which requires her to continue to meet cl.890.211 by having an ownership interest in 1 or more actively operating main businesses in Australia.

6. The Tribunal has reviewed documentation provided by Ms Li’s representative from Goh Accountants and considers that, even if it accepts that she met cl.890.213 at the time of application, it is not satisfied that she meets the time of decision requirement in cl.890.221 of Schedule 2 to the Regulations. Evidence before the Tribunal indicates that the Company ceased operating in April 2016. As there is no longer an actively operating business, the Tribunal finds that, at the time of this decision, Ms Li does not continue to have an ownership interest in 1 or more actively operating main businesses. She therefore does not continue to meet cl.890.211 and, consequently, does not meet the requirements of cl.890.221of Schedule 2 of the Regulations.

7. In light of the above, the Tribunal finds that cl.890.221 of Schedule 2 of the Regulations is not met by Ms Li.

8. There is no evidence before the Tribunal to indicate that any of the secondary applicants meet the primary requirements for the grant of the visa.

9. The applicants have only sought to satisfy the criteria for a Subclass 890 visa.  No claims have been made, and there is no evidence to suggest, that the applicants meet the requirements for any of the other visa subclasses in Class DF.  Accordingly, the Tribunal finds that the applicants do not meet the criteria for any Class DF visa.

10. Given the above, the Tribunal affirms the decision under review in respect of the first, third, fourth and fifth named applicants.

    Jurisdiction in relation to the second named applicant

11. Information before the Tribunal indicates that the second named applicant, Ms Li’s husband Mr Chen Zhang, was not in Australia at the time of the delegate’s decision.  In the circumstances, the Tribunal does not have jurisdiction in respect of Mr Zhang. 

12. The Tribunal communicated this to Ms Li in its invitation to attend the hearing on 20 December 2016 and also explained this to Ms Li during the hearing.  She indicated that she understood the Tribunal’s position in this regard.

    DECISION

13. The Tribunal affirms the decision not to grant the first, third, fourth and fifth named applicants Business Skills (Residence) (Class DF) visas.

14. The Tribunal does not have jurisdiction to review the decision in relation to the second named applicant.

    Katie Malyon

    
    Member